“Does IT matter?” was the title of an article in a leading general management magazine in 2000s which stirred up a debate. This is in contrast with the relatively recent remark attributed to GE’s Chairman & CEO, “if you woke up as an industrial company today, you will wake up as a software and analytics company tomorrow.” Quite a big difference in a decade! Predicting the future out for a decade and what is needed to support it is extremely tough! The future also varies across industry segments and markets. Despite this, it can be stated with certainty that IT applications of the future will continue to be based on the old, i.e., bringing forward powerful business-IT capabilities to ensure business models / customer journeys / business value chains, deliver better business outcomes and customer experience. While this is common sense, let us dig deeper by looking at a few business themes (BT) that will inform the future out for a decade, in the first part of this blog. In the second and third parts we will look at how such business themes will recalibrate the approach to development and maintenance of IT applications, and how enterprises should prepare for this.
BT#1: Business Model innovation / value chain disintermediation / P&L impact from insights aided processes: The Transportation industry offers a ready example of business model innovation in that aggregators of taxis have become sizeable enterprises in a capital-light manner. A decade ago a Fortune 10 ranked Automaker reworked its Mission statement to focus on Transportation and yet it could not rally its organization to profit from its foresight. Looking ahead Driverless cars can potentially disrupt the current business models of Automakers and aggregators of taxis. Value chain disintermediation is exemplified by the travails of brick-and-motor Retailers in the initial days of the eCommerce; now some brick-and-motor Retailers are giving etailers a run for their money based on powerful mix of business model elements such as Digital Commerce assets, multi-channel experience, etc. Trading within Financial Services industry is a good example of using insights to drive P&L impact (by nature Trading is a heavy user of IT). Insights are used to power real-time transaction pricing and decision making generating hundreds of billions in Trading revenue.
BT#2: Convergence of Enterprise Computing and Personal Computing to enhance customer journeys and business value chains: Today you may be concerned that your teenager is not conversing much with you. Tomorrow an operations manager in an enterprise may be concerned at an occurrence such as, “… my cloud based intelligent manager of highway traffic is not communicating real-time solutions to the onboard computer applications of vehicles nor to smart watches of the commuters…as a result traffic is piling up on highways and connecting roads” spot lighting the tighter convergence of the two Computing worlds in the brick-and-mortar world (convergence of these two Computing worlds is already the norm in Digital Commerce business use cases, and so on). This example also highlights the demand on IT networks to work across a range of technologies, protocols, and for IT applications to work with heavy volumes of time-series data (we are in the midst of an exponential growth in data volumes) to support real-time insights driven actions that ensure business KPIs become faster-better-cheaper-and-smarter, while limiting consumption of computing resources (to in-turn limit consumption of energy).
BT#3: Industry 4.0 Manufacturing driven by insightful information flow to realize business agility: The adage “Information on the package is as important as its contents…” captures the transformation of the Express Package Delivery industry. This is also reflective of what is underway in Manufacturing, namely: smart factories where work-in-progress components are information aware to drive subsequent production operations needed to be performed on themselves than pre-programmed work stations on factory floors based on a set routines and change overs (in Process Manufacturing a similar effect can be created after filling into cans / drums, so on); such factories also limit the need for human intervention to set-ups, supervision, etc. The information flow extends upstream to create a pull effect on the Supply Chain and downstream to realize an adaptive Distribution system – a tighter connection of the top floor to the shop floor. This is amplified by precision picking-palletization-packing-shipping capabilities from huge warehouse at rapid speeds and frugal price points! This extends / turns-on-its head concepts like JIT Manufacturing, Vendor Managed Inventory, Delayed Differentiation, etc. enabling businesses to realize business agility in a VUCA (Volatile, Uncertain, Complex and Ambiguous) world without being undone by inflexible and excessive automation that is out of line with context.
BT#4: Implication of future location of Production sites: Production sites started off with being located in the developed portions of the world, expanded to developing parts of the world in pursuit of large customer base, etc. Increasingly Amazon and Google besides putting their IT on the Cloud; harbor ambitions of Space research, Space travel, construction of Chip factories in Space aimed at exploiting the availability of minerals, ores and solar energy to minimize consumption of natural resources on Earth. Chip factories will in-turn spawn need for, related factory equipment to be supplied and installed locally, thereby kicking-in a whole chain of events – Industry 4.0 Manufacturing techniques will support operations of these factories in conditions unfavorable for human existence. In such a scenario, IT applications will need to work in Space, and in conjunction with connected Earth based organizational elements. Future Investment Banking IT operations will need to factor in the impact of Space based production centers on Pricing, Trading scenarios of Precious Metals, etc. Insurance IT operations will also need to conduct ongoing risk assessment of these Space-Earth based assets for effective Underwriting, Policy management, and so on.
Unlike the previous themes, it is unclear if this scenario will unfold within a decade, nor is it relevant for all types of products, but the capabilities of IT applications needed to support such a future is likely to be quite different from what is prevalent today.